Category Archives: Case Studies

Georgia Hotel Turnaround: Expert Owner Now in Place

Our East Coast clients, experts in hotel turnaround, were ready for a new business venture. They had been looking at various areas and had been eyeing the I-75 corridor. They were particularly interested in a property that could easily become even more profitable.

These particular clients have become well-known and recognized for excellent customer service. Specifically, they have perfected the art of garnering good online reviews, parlaying this into increased occupancy and market share.

Our clients were familiar with GRP Capital, because they were sellers in a previous transaction. They quickly called Senior Associate Ryan Dumas to tell them about their business plans.

Ryan Dumas really appreciates the hard work and the special attention that these clients give to their hotels. Ryan said, “It was very easy to get a lender excited about this project, once they understood our clients’ strengths. We found them a lender who was willing to take on an undervalued property. The lender believes that the new buyers will be successful in creating a strong, profitable hotel.”

Special Considerations for a Hotel Turnaround:

• Strong Management Resume. If you are considering purchasing an underperforming business of any kind, be able to showcase your business plan. Refine your management resume so it emphasizes your management strengths. Work with our GRP Capital team to create a stronger business plan, which demonstrates how your ideas will translate to higher profit margins.

• Don’t be humble; brag! Be sure that the GRP team and the lenders know what you have done in the past to overcome challenges in owning and managing a business. How have you handled renovations or staffing issues? What about a less than stellar online review? Make sure you have a record of the benefits of the positive actions you took.

• Choose your new business carefully. No matter how strong you are as a manager, not every business can be saved. Let us evaluate a business with you, so we can be sure that there are not endemic issues that will be too difficult to overcome. Our business evaluation services are free.

Our GRP Capital team specializes in finding the right lender for each project. We save our clients time and money, as we research the best choices for their funding sources. Our experience allows our clients to find funding that is project-appropriate and will allow for sufficient cash flow. Whether you are looking to refinance or purchase, we would love to discuss your business plans with you. If you are considering becoming a first-time (or second or third time!) buyer, we can assist you.

All Weather Focus: Loan Closing No Matter What

Sometimes a loan closing poses unexpected challenges.

Our Florida-based clients were used to Florida weather.

But they weren’t counting on a hurricane during the underwriting process.

GRP Capital stayed focused during the entire loan process , as loan closing was the key to this refinance and partnership buyout.

As it turned out, the property had minimal damage and only suffered from some short-term power outages. The storm, however, delayed the appraisal and Environmental Site Assessment (ESA) reporting. When there are large storms, appraisers and environmental engineers are in high demand.

GRP Capital stayed in touch with the lender, the clients and all of the third party vendors to make sure everybody prioritized this closure.

GRP Capital President Rick Patel worked closely with the clients and the other stakeholders, too. Rick noted, “This loan closing was very important to the client partners. The ownership of the hotel had changed and we needed new financing with correct guarantors. With our guidance, the loan closed in a reasonable time, despite rather challenging circumstances in the region.”

What to do if your Property Has Damage from a storm?

• Communicate with your lender or ask GRP Capital to: Lenders and borrowers are not adversaries, but business partners in a way. Lenders deserve to know if your business has sustained damage, which will affect your bottom line. Lenders can be your advocates. Helpful lenders can suspend payments, extend a loan or even restructure a loan to include repairs that won’t be covered by insurance.

•  Combine storm damage repair with a PIP:  Believe it or not, storm damage can actually be an opportunity. If you have always wanted some renovation, consider the timing. Renovating during repairs might save you money. .

•  Hire an attorney: An attorney can work with your insurance company to protect your interests. He or she will also review any contracts. Most importantly, attorneys will remove any liens that are placed on your property during the repair process.

Our GRP Capital team specializes in finding the right lender for each project. We save our clients time and money, as we research  the best choices for their funding sources for purchase, refinance and construction loans. Our experience allows our clients to find funding that is project-appropriate and will allow for sufficient cash flow. If you are considering becoming a first-time (or second or third time!) buyer, we can assist you.

Florida Beach Hotel Loan Closes

Our clients were looking for a Florida beach hotel. When this one came on the market, they were ready to pounce. The hotel is on a small island with very few other hotels in direct competition. The clients have retained the current management. However, they have set up new incentives in order to increase occupancy and garner even better online reviews.

GRP Capital President Rick Patel worked closely with the buyers, as well as many other participants in the loan process. These included the insurance agent, the accountant and the various attorneys. Rick stated, “This hotel was a high value property because of its position in a limited marketplace and its potential for profit. With these larger transactions, there are even more details that we needed to be on top of. I was proud of our team for closing the loan as quickly as possible, locking in the interest rate. I know our clients are happy with their new business and are ready to capitalize on their acquisition.”

Issues Unique to Beach Hotel Loans

• Staffing and management : Some beach properties are far from affordable housing and some are not. Be aware that you will have to find staff who can afford to live within commuting distance. Some business owners are even reserving housing for key staff members as an added benefit.

•  What’s the insurance claim history of the property?  Many coastal properties have a history of moderate or even significant damage from storms and flooding. Find out about any recent insurance claims. Make contact with the current insurance agent to obtain a quote and compare that with any from an agent you are currently using. Make sure you factor in the insurance costs when you are evaluating financial statements and expenses.

•  What happens during the off season? Many properties with high tourist occupancy have a high season and a low season. What is the occupancy “out of season”? What can be done to increase occupancy and maintain ADR?

Our GRP Capital team specializes in finding the right lender for each project. We save our clients time and money, as we research  the best choices for their funding sources for purchase, refinance and construction loans. Our experience allows our clients to find funding that is project-appropriate and will allow for sufficient cash flow. If you are considering becoming a first-time (or second or third time!) buyer, we can assist you.

We Were Rushed; Seller Needed to Close Quickly

Our clients wanted to purchase a Gulf Coast hotel, but they needed to close quickly. The sellers were ready not only to sell, but to purchase another property. Not surprisingly, the sellers needed the proceeds from the sale of this hotel to fund their new enterprise.

GRP Capital was ready for this mission!

GRP Capital Managing Director  Krishan Patel, GRP President Rick Patel and Loan Processor Keren Alpert were in constant communication with each other. The team also worked in tandem with the buyers, the sellers, the attorneys, the lender and the title company. Therefore, the loan was able to close quickly, allowing the sellers to take their proceeds. Even better, the buyers have taken on a very profitable hotel, which is newly renovated and should continue to cash flow nicely for them.

Rick Patel stated, “We really worked diligently as a team to expedite this loan and close quickly. We knew how important it was to the seller and the buyers. We want to do what we can to support the closing process. As a result, the seller and the buyer can preserve their good relationship with each other. We were very pleased with the time frame and the outcome.”

Is it possible to close quickly?

• Is the title report clean? A “clean” title means that are minimal liens on the property. Previous mortgages are perfectly fine, as well as EIDL loans. In addition, there should be no clouds on title, that is nothing should bar a clear chain of ownership. Sellers who wish to close quickly will often ask their attorneys or title company to run a preliminary title report, which can show if there are any issues that need attention. Refinances typically have fewer title issues.

•  Is there a recent survey?  A recent survey will show the borders of the real estate, the building square footage, the elevation and the flood zone. Many title companies and lenders require a recent survey. Unfortunately, in many locales, there is a shortage of surveyors. Therefore, obtaining a survey is a high priority at the beginning of the loan process.

•  Is the business profitable? GRP Capital has definitely closed multiple loans on businesses that are underperforming. In these situations, the buyers are planning to make changes in the facility or the operation of the business in order to turn it around. However, in order to close a loan quickly, a currently cash flowing business is optimal.

Our GRP Capital team specializes in finding the right lender for each project. We save our clients time and money, as we research  the best choices for their funding sources for purchase, refinance and construction loans. Our experience allows our clients to find funding that is project-appropriate and will allow for sufficient cash flow. If you are considering becoming a first-time (or second or third time!) buyer, we can assist you.

Colorado hotel loan; repeat client buys nearby property

We were happy to close a Colorado hotel loan for a repeat client of ours. This partnership group has found success in the Mountain states. They were eyeing a property not too far from a successful hotel that they previously purchased with a GRP-supported loan. In addition, they discovered that there was an absentee owner. Savvy business owners often target businesses held by out-of-town owners as potential purchases. Often, these properties can be extracted for more revenue. In this case, our clients will be able to manage this hotel along with their other hotel, pooling staff and using similar operating procedures.

GRP Capital Managing Director  Krishan Patel led our team to close this loan. Patel stated, “I know this client group well, as we have closed loans with them before. They are excellent business owners and managers and know the hospitality industry very well, particularly the Colorado hotel business. We supported them through the challenges of purchasing from an out-of-state owner. Now they are ready to have even greater market penetration with their two nearby properties.”

Things to remember when purchasing from Absentee Landlords:

• Who knows this business the best? Out of state (or country) business owners vary in their ownership style. Some really understand all of the properties in their portfolio. Others defer to their management team and know very little. If you are considering purchasing from an absentee landlord, determine if they know their business well and if not, get the contact number of the person who does.

•  Determine property condition Again, depending on the style of the owner, properties without ownership nearby can have deferred maintenance issues. Utilize the appraiser or even your own third party hires to determine the property condition. Be sure to include any needed renovation or upgrades in your loan package, especially if completing these would lead to greater revenue.

•  Get a solid understanding of the financials Even before potential lenders underwrite the loan, you should have a good sense of how the business is doing. What are its challenges and strengths? What kind of management is needed? Most importantly, will you be able to give the attention and oversight needed to make this business profitable?

Our GRP Capital team specializes in finding the right lender for each project. We save our clients time and money, as we research  the best choices for their funding sources. Our experience allows our clients to find funding that is project-appropriate and will allow for sufficient cash flow. If you are considering becoming a first-time (or second or third time!) buyer, we can assist you.

Self Storage Units are Strong Investments

A self storage loan may be a good fit for you and your business portfolio. What are some reasons that lenders are eager to fund purchases, refinances and even construction projects for self storage? We have even been successful getting cash out with a recent refinance.

A Self Storage Loan is a great bet right now.

• Self Storage facilities tend to be easy to maintain. Unlike homes and other businesses with more complex infrastructure, self storage facilities are designed for stuff and not people. There is limited water onsite. There may be a mix of temperature controlled units and those without. Even the electricity can be very minimal in these units, typically to prevent renters from doing projects onsite and spending too much time onsite. The most critical components of maintenance are typically security and lighting.

•People need storage during lifetime transitions.  Most people need some sort of storage options at some point. Whether customers are downsizing, moving to retirement communities, taking over the belongings of a loved one or changing locations for any reason, changing jobs or moving in and out of university settings, self storage is an affordable short term solution. Therefore, every community needs storage options of a variety of sizes and types.

• People store for longer than they anticipate. Storage customers typically rent as a stopgap measure. However, they tend to underestimate how long they will require storage. In addition, storage is so easy and the prices can be quite competitive. As a result, short term solutions often become long term patterns. This is great for owners!

Self Storage Upgrades:

If you already own a storage business or are looking to purchase one, there are some key upgrades that add value to the company:

  • Setting up automated security. Security is one of the key expenses and the most important amenity for most renters. Gate security and onsite cameras protect your investment and make your renters feel safer.
  • Enabling features that facilitate timely payments: There are excellent platforms that remind customers by text and email of upcoming payments, utilize an app to make payments and help customers set up automatic payments. These features increase on-time payments and do not require staff intervention to track down regular on-time renters.
  • Climate control. Depending on the marketplace, there may be a demand for a certain mix of climate control units. Upmarket storage may also include humidity control, even more secure locations and special units for vehicles.

Our GRP Capital team specializes in finding the right lender for each project. We save our clients time and money, as we research the best choices for their funding sources. Our experience allows our clients to find funding that is project-appropriate and will allow for sufficient cash flow. Whether you are looking to refinance or purchase, we would love to discuss your business plans with you. If you are considering becoming a first-time (or second or third time!) buyer, we can assist you.

Self Storage Loan Closes; Cash Out Too!

Congratulations to our Texas client who recently refinanced his self storage loan. He worked closely with Senior Associate Ryan Dumas and the rest of our team.

Ryan Dumas enjoyed getting to know our client, who managed to fit in getting us documents quickly, despite a very busy work schedule. Ryan noted, “I was very pleased that we found a great match for this self storage loan using our lender network. We found a competitive loan with fixed rates for a ten year note. My client got a decent amount of cash out, just from the terms of the loan. But even better, when the appraisal results came in and they were so favorable, we worked with the lender and got even more cash out! My client has lots of plans to continue to maintain this business and preserve his profitability. ”

A Self Storage Loan is a great bet right now. Why?

• Self Storage facilities tend to be easy to maintain. Unlike homes and other businesses with more complex headquarters, self storage facilities are designed for stuff and not people. There is limited water onsite. There may be a mix of temperature controlled units and those without. Even the electricity can be very minimal in these units. The most critical components of maintenance are typically security and lighting.

•People need storage during lifetime transitions.  Most people need some sort of storage options at some point during their live. Whether customers are downsizing, moving to retirement communities, taking over the belongings of a loved one or changing locations for any reason, changing jobs or moving in and out of university settings, self storage is an affordable short term solution. Therefore, every community needs storage options of a variety of sizes and types.

• People store for longer than they anticipate. Storage customers typically rent as a stopgap measure. However, they tend to underestimate how long they will require storage. In addition, storage is so easy and the prices can be quite competitive. As a result, short term solutions often become long term patterns. This is great for owners!

Our GRP Capital team specializes in finding the right lender for each project. We save our clients time and money, as we research the best choices for their funding sources. Our experience allows our clients to find funding that is project-appropriate and will allow for sufficient cash flow. Whether you are looking to refinance or purchase, we would love to discuss your business plans with you. If you are considering becoming a first-time (or second or third time!) buyer, we can assist you.

Texas RV Park Purchase and Upgrade

GRP Capital is pleased to announce a new loan for the purchase and upgrade of an RV park. This facility is located in Southeast Texas.

Our GRP Capital team worked closely with his client, helping to facilitate the financing. Managing Director Krishan Patel said, “The borrowers were great to work with. They are experienced in this sector. With this purchase, we are helping them expand their portfolio. Our entire GRP Capital team consulted with the clients. We worked diligently to steer them towards a loan that matched their financing needs. Even better, we are making plans for the clients’ next acquisition.”

Why an RV Park is a Great Investment:

• Current Travel Trends: Tourism trends in the United State are favorable for RV park usage. Americans are favoring driving over flying and are anxious to arrive at far-flung destinations.

• Pandemic-Proof: Travel in a recreational vehicle or camper and lodging at an RV park make sense during our new normal. An RV park allows for sociability outside, while protecting vulnerable people from overexposure.

•  More opportunities for market penetration : While there are multiple hotels at many highway exits, this sector is not as crowded. An RV park with updated amenities can capture market share. This requires effective marketing, excellent management and maintenance and good decisions on what amenities drive occupancy.

•  Lenders Like RV Parks : Lenders, particularly SBA lenders, look favorably on this sector of hospitality lending. As a result, GRP Capital can find matches for qualified borrowers.

Our GRP Capital team specializes in finding the right lender for each project. We save our clients time and money, as we research  the best choices for their funding sources. Our experience allows our clients to find funding that is project-appropriate and will allow for sufficient cash flow. If you are considering becoming a first-time (or second or third time!) buyer, we can assist you.

Texas Hotel Owner Closes High Leverage Loan

Our clients already owned a Texas hotel. They were ready to purchase another Texas hotel in the northwest part of the state.

They really wanted to minimize their equity injection.

Each of our clients have different needs. Some are more rate-sensitive, some clients want loans with lenders who will become their primary business relationship. And some, like these clients, are looking for a high leverage loan.

Our GRP Capital Team worked closely with the clients. Managing Director Krishan Patel noted that he was proud of the sensitive guidance during the negotiations of the purchase and sale agreement. He also helped his clients prioritize the aspects of the new loan that were most important to them. “I was pleased that we were able to match these clients with a loan that met their needs. They have great experience in the hospitality industry. As a result, they will maximize the profit of their new hotel. Their ability to keep their equity injection manageable was a critical component of the loan. I look forward to working on other projects with them, as I know their situation and goals well.”

Best Practices for Organizing Your Equity Injection:

During underwriting, the clients worked quickly to provide evidence of their equity injection. The equity injection is the “money down”. If you are contemplating a new loan (not a refinance), here are some tips regarding equity injections.

• Sufficient equity: The lender will require bank statements or statements from stock accounts. These statements must show enough money. Just before closing, clients transfer these funds via wire.

• Dividing it Up: Typically, all of the partners participate in putting money down. Ideally, the equity injection is divided up proportionally among the partners. Most buyers contribute towards the down payment, matching the percentages of ownership.

•  Clean sources of equity : Down payments need to consist of funds that are “clean”. This means that the money has not been recently loaned to you. As you are choosing which accounts will be the source of your equity injection, choose wisely. The lender will “source” any large movements of money into an account (typically more than $1,000). This means you will have to tell the lender where the money came from and often provide a statement (or several) from the source of the transfer.

Our GRP Capital team specializes in finding the right lender for each project. We save our clients time and money, as we research  the best choices for their funding sources. Our experience allows our clients to find funding that is project-appropriate and will allow for sufficient cash flow. If you are considering becoming a first-time (or second or third time!) buyer, we can assist you.

Adjacent Hotels: A Great Business Plan

Our south Texas client recently purchased adjacent hotels.

One hotel was a small, independent property. And on the adjacent property was a Best Western.

GRP Capital worked closely with the buyers, the sellers and the lender on two separate loans that closed on the same day.

Senior Associate Ryan Dumas shared his clients’ vision for the adjacent hotels. “My clients were poised to take ownership of these nearby properties. They will be able to continue to have excellent market penetration on the San Antonio to Houston corridor. They have solid business plans; having two adjacent hotels will make certain aspects of hotel ownership easier for them.”

The Benefits of Owning Adjacent Hotels:

• Reaching More Customers . When one business owner owns two adjacent properties, they have double the opportunities to attract guests. The two hotels can have different rate structures and different amenities (pet friendly or not?). In reservation aggregator websites and the websites for the two hotels, the business owner can differentiate and reach out to a greater variety of customers.

• Staffing Issues:  Many hotels are still struggling with finding and retaining employees. In addition, hotels that have a high and low season are sometimes unable to offer stable employment. However, owners of adjacent hotels can utilize one group of staff members to do the same work in two places, which guarantees more work and therefore greater job stability. The owner can shift employee responsibilities between the two properties as needed.

• Same system; different address. Experienced business owners quickly establish efficient business practices. Setting up employee protocols, cleaning regimens, checkin and checkout procedures for two properties is not appreciably more difficult than setting these up for just one location.

Our GRP Capital team specializes in finding the right lender for each project. We save our clients time and money, as we research the best choices for their funding sources. Our experience allows our clients to find funding that is project-appropriate and will allow for sufficient cash flow. Whether you are looking to refinance or purchase, we would love to discuss your business plans with you. If you are considering becoming a first-time (or second or third time!) buyer, we can assist you.